Question

Assess the risks and issues that exist and must be dealt with in the case of global investing compared to domestic investments.  

Answer 1

The following are the various Risks and issues in case of global investing compared to domestic investing.

Profit repatriation or Disposal of investment - It is pertinent to note whenever we invest in a non-home country the main drawback is that the laws of the foreign countries are such that there are restrictions on the repatriation of profits and disposal of investments most of the country's generally put restrictions and tell that the profits to be reinvested in the same country or repatriation will be generally deferred over a period of time.

Exchange rate fluctuation and transaction cost- When ever investment is made in non home countries we have exchange rate fluctuation risk generally exchange rate change on a day to day basis and it also depends on various factors more over the bid ask spread of banks also increases the transaction costs when we try to bring our money back into home country .

Local Government and Political Risk Factors - Inorder to Invest and establish a foreign operation is it important to take into consideration of laws of the local government the restrictions they put and the reservations they have .

Increased Compliance burden - When ever we establish globally then the they have comply with the international laws one particular example can be Global Reporting and country by country transactions need to be reported and transfer pricing regulations have to be followed and also Double taxation avoidance agreements have to be follows by the entities.

Behaviour Pattern of people and Attitude towards Global Investment Firms - Public relations play a critical factors for any global investment . Any entity which don't have good corporate image cannot succed in global investment if the country is a rival country.